R. Wilson Ascots, a retailer of collegiate neckwear, has completed the sales forecast for the coming year.

R. Wilson Ascots maintains an ending inventory level of 60% of the following month's cost of goods sold. The company's cost of goods sold is 40% of sales.
Required

a. Prepare R. Wilson Ascots’ purchases budget for October. Use the following format:

Budgeted sales dollars

× Cost of goods sold percentage

= Cost of goods sold

+ ending inventory

= Total inventory required

− Beginning inventory

= Budgeted purchases

b. Assuming that R. Wilson Ascots pays for 30% of its purchases in the month of purchase and the remaining 70% in the month following the purchase, prepare the company’s cash payments budget for October.

Transcribed Image Text:

$38,000 $47,000 March $32,000 September $45,000 $80,000 $56,000 November $50,000 31,000 December $62,000 January $37,000 July February $28,000 August April May June $40,000 October